What is your assessment of the second wave of the pandemic?
The second wave economically has been less impactful than the first. From a humanitarian point of view, the second wave impacted much more. During the first wave, the lockdown happened very quickly, the industry was underprepared, the whole supply chain was disrupted. This time we did not have that kind of complete lockdown. Industry was better prepared. Globally, things are better. The impact of the stimulus by multiple countries is playing out, so India’s exports are strong. Global disruption of supply chains hasn’t happened like last year.
The challenge for the governments is to make sure that people exercise discipline and not take undue risks going forward. The only concern we had was will the rural economy take off like last year, or is the situation in the rural community much worse than we think? The indication that we are getting over the last few weeks is that the rural economy is not too bad. If I talk to tractor manufacturers, they say things are not so bad. Monsoons are ahead of expectations. If we have a good monsoon and rural markets are strong, that’s a good place to start the recovery, and then the space to watch is the auto sector. Things are better than we thought three or four weeks back. That’s why we feel there’s a need for stimulus just to make sure that we don’t slip.
Do you see stagnant consumption to be a challenge?
It is important for us to work through the companies, through industries to make sure that jobs are created, jobs are protected as much as possible. Second, how do we ensure vaccination happens? If you have a Covid 3.0, you can’t take too many of these kinds of disruptions every few months because that will derail the whole growth aspiration or agenda totally. Then you can’t do anything about jobs or anything about everything else. Vaccination is step one. Step two is that we protect livelihoods as much as we protect lives. We need to focus on parts of the economy which are more stressed so that job losses are minimised in those areas and hence consumption is back. The other thing is can we have some temporary reduction in GST for consumer products for the next six months. Which is not a permanent change, but more to kind of help people manage their expenditures better if they spend more on medical kind of expenses, at least that they don’t feel the pinch so much. And for the rural economy: How can we increase the allocation for the MGNREGA scheme and make sure the money is spent productively?
Do you see the second wave’s impact and now the tussle with big tech companies hurting India’s image as an investment destination?
Everyone has gone through the pandemic, dealt with it differently, different impact. If we get vaccination back on track very quickly, I hope we can get back some of the confidence that the world had in us, which will come back once we get the economy back and the vaccination on track. The other aspect on the social media tussle with the government — this is happening across the world. Australia has had an issue, Europe is always having issues, there are different dimensions to it, which are getting played out. These are loosely regulated space and, as regulations come up, there will be issues, there will be conversations, and hopefully we will find the right balance. India is not unique in what is happening with social media companies. You can argue the finer points of the debate but at a very fundamental level, the fact regulations will evolve to deal with these challenges — which are new challenges — is inevitable. What CII can do is to work with the government, with industry, to make sure the regulatory environment transitions very smoothly into what is appropriate because many of these rules are also not factored in. You look at the 15% minimum corporate tax that has been proposed. The tax laws were framed for physical supply chains and not for these kinds of supply chains or for corporates to be positioned anywhere. So, as the world changes, regulations also have to change to be contextually appropriate.